This blog is used to post legal tips for businesses and consumers in California as well as commentaries on issues of interest to clients in the San Diego area. For information about our services, please contact us at (619) 448-2129. This publication is NOT INTENDED TO SERVE AS A SUBSTITUTE FOR LEGAL ADVICE. Please consult with a licensed attorney if you require legal advice. We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.

Wednesday, February 13, 2008

Most businesses are owed money at some point. Every business owner offers their product and or service in good faith that once delivered payment will be made. As a business owner that sometimes has unpaid invoices do you often think, “What’s it going to take to get this client to pay? Do I turn their account over to a collection agency? Do I take them to small claims court, or do I write it off to bad debt?”

Your customers need to feel your attention is on their needs and upholding your side of the contractual agreement, not just getting paid. Sometimes that is hard to do when the issue has continued for a long period of time and there appears to be no resolution in sight. Businesses usually intend to pay their invoices. Some of the reasons for non-payment include:

As the owner of a commercial collection agency, two of the most repeated concerns I hear are: how will using a commercial collection agency affect the relationship with the customer? Will my business still get paid for the overdue invoices? A good commercial collection agency should not interfere with your ongoing business relationship. Their objective is to resolve the lack of payments as quickly as possible. It is a small but important fact; don’t forget your manners and always be courteous and respectful toward others. Exhibiting professional and ethical behavior will you get you further in your collection efforts as a business owner and may create opportunities for future work.

Use words that demonstrate concern for the present issue and the desire to correct the mistake so it is not repeated. Try using a “power word or phrase” to connect with your clients. Power words say to your customers “What can I do to fulfill your need?” In asking this question you demonstrate care and concern about the problem and you want to do whatever is necessary to reach an acceptable payment solution. Here are some “power phrases” to use when working to get the client to say yes and pay the bill:

• What else can I do to help resolve the balance due?• I’ll take care of that for you.• I’m sorry for the mistake. I’ll correct that ASAP.• Let’s work together to resolve this.• What do you think?• I don’t know the answer but I’ll find out for you.• Consider it done.• Thank you.• We appreciate your business

Finally it is important to stay on top of your receivables while building your business. As your accounts reach 90 days and older, that is the time to reach out for outside collections help. Working with a collection agency instead of pursuing legal action is usually more cost efficient in time and money. Using a collection agency can help you to reduce the number of accounts written off to bad debt. An outside commercial collections agency will help collect the monies owed for past due products and services. Use them as another way to get your clients to say yes to pay your invoices.